- The Washington Times - Tuesday, March 17, 2009

LOS ANGELES (AP) - Standard & Poor’s Ratings Services on Tuesday lowered its corporate credit rating on General Growth Properties Inc. below junk status, citing the debt-laden mall operator’s default on some of its credit agreements.

The Chicago-based real estate investment trust has been struggling to stave off a Chapter 11 bankruptcy filing by trying to convince its creditors to put off calling in payments until the end of this year while it tries to refinance its debt load.

The company defaulted on $395 million in unsecured bonds that came due after maturing on Sunday. General Growth also has defaulted on loans originally due in November. The company got a waiver on payment default until Feb. 12, but still hasn’t paid the debt. As a result of its nonpayment of those loans, General Growth is in default on its unsecured bank credit facility, S&P; noted.

Another $200 million is set to come due in little more than a month.

The agency lowered General Growth’s corporate credit rating to “D,” or default, from “CC/Negative/—.” The ratings service also lowered the issue-level rating on the REIT’s $3.5 billion unsecured bank credit facility to “D” from “C.” The facility has roughly $2.58 billion outstanding as of Dec. 31.

S&P; maintained its recovery rating of “5” on the mall operator’s unsecured bank credit facility and on $2.3 billion in senior unsecured notes issued by its subsidiary, The Rouse Co. The rating indicates that lenders can expect a modest recovery of about 10 percent to 30 percent of their funds in the event of payment default.

S&P; said its decision took into account General Growth’s current inability to refinance $900 million in secured mortgage loans on two Las Vegas properties, the Fashion Show Mall and the Shoppes at the Palazzo.

The rating service’s actions come a day after General Growth disclosed that lenders waived default on its $2.58 billion credit facility until the end of the year, and that its Rouse unit extended a request for forbearance on another more than $2 billion worth of debt, after it failed to convince enough of its bondholders to give it more breathing room.

That consent solicitation was set to expire on Monday, but the company said it has extended the offer until 5 p.m. Friday.

Shares of General Growth, which has a stake in more than 200 malls across 44 states, closed unchanged at 61 cents on Tuesday.

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On the Net:

General Growth Properties Inc.: https://www.ggp.com/

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